MUNIVEST
CALIFORNIA
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 1996
Officers and Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
M. Colyer Crum, Director
Edward H. Meyer, Director
Jack B. Sunderland, Director
J. Thomas Touchton, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Walter C. O'Connor, Vice President
Roberto Roffo, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
NYSE Symbol
MVC
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Schroder Bank &Trust Company
One State Street
New York, NY 10004
This report, including the financial information herein, is
transmitted to the shareholders of MuniVest California Insured Fund,
Inc. for their information. It is not a prospectus, circular or
representation intended for use in the purchase of shares of the
Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a
representation of future performance. The Fund has leveraged its
Common Stock by issuing Preferred Stock to provide the Common Stock
shareholders with a potentially higher rate of return. Leverage
creates risks for Common Stock shareholders, including the
likelihood of greater volatility of net asset value and market price
of shares of the Common Stock, and the risk that fluctuations in the
short-term dividend rates of the Preferred Stock may affect the
yield to Common Stock shareholders. Statements and other information
herein are as dated and are subject to change.
MuniVest California
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MUNIVEST CALIFORNIA INSURED FUND, INC.
The Benefits and
Risks of
Leveraging
MuniVest California Insured Fund, Inc. utilizes leveraging to seek
to enhance the yield and net asset value of its Common Stock.
However, these objectives cannot be achieved in all interest rate
environments. To leverage, the Fund issues Preferred Stock, which
pays dividends at prevailing short-term interest rates, and invests
the proceeds in long-term municipal bonds. The interest earned on
these investments is paid to Common Stock shareholders in the form
of dividends, and the value of these portfolio holdings is reflected
in the per share net asset value of the Fund's Common Stock.
However, in order to benefit Common Stock shareholders, the yield
curve must be positively sloped; that is, short-term interest rates
must be lower than long-term interest rates. At the same time, a
period of generally declining interest rates will benefit Common
Stock shareholders. If either of these conditions change, then the
risks of leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock
capitalization of $100 million and the issuance of Preferred Stock
for an additional $50 million, creating a total value of $150
million available for investment in long-term municipal bonds. If
prevailing short-term interest rates are approximately 3% and long-
term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million
of Preferred Stock based on the lower short-term interest rates. At
the same time, the fund's total portfolio of $150 million earns the
income based on long-term interest rates. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pick-up on the
Common Stock will be reduced or eliminated completely. At the same
time, the market value of the fund's Common Stock (that is, its
price as listed on the New York Stock Exchange) may, as a result,
decline.Furthermore, if long-term interest rates rise, the Common
Stock's net asset value will reflect the full decline in the price
of the portfolio's investments, since the value of the fund's
Preferred Stock does not fluctuate. In addition to the decline in
net asset value, the market value of the fund's Common Stock may
also decline.
<PAGE>
Important Tax
Information
(unaudited)
All of the net investment income distributions paid by MuniVest
California Insured Fund, Inc. during its taxable year ended October
31, 1996 qualify as tax-exempt interest dividends for Federal income
tax purposes. Additionally, there were no capital gains distributed
by the Fund during the year.
Please retain this information for your records.
DEAR SHAREHOLDER
For the year ended October 31, 1996, the Common Stock of MuniVest
California Insured Fund, Inc. earned $0.775 per share income
dividends, which included earned and unpaid dividends of $0.068.
This represents a net annualized yield of 5.70%, based on a month-
end per share net asset value of $13.60. Over the same period, the
total investment return on the Fund's Common Stock was +8.02%, based
on a change in per share net asset value from $13.39 to $13.60, and
assuming reinvestment of $0.776 per share income dividends.
For the six-month period ended October 31, 1996, the total investment
return on the Fund's Common Stock was +8.44%, based on a change
in per share net asset value from $12.93 to $13.60, and
assuming reinvestment of $0.383 per share income dividends.
For the six-month period ended October 31, 1996, the Fund's Auction
Market Preferred Stock had an average yield of 3.03%.
The Municipal Market
Environment
Municipal bond yields generally moved lower during the six-month
period ended October 31, 1996. Long-term tax-exempt revenue bond
yields, as measured by the Bond Buyer Revenue Bond Index, declined
approximately 35 basis points (0.35%) to end the October period at
approximately 5.94%. The municipal bond market exhibited
considerable weekly yield volatility over the last six months with
bond yields vacillating as much as 20 basis points. This ongoing
volatility was in response to fluctuating evidence regarding the
degree to which recent economic growth will result in any
significant increase in inflationary pressures. Much of the evidence
<PAGE>
supporting stronger growth centered around the strong employment
growth seen in April and June and bond yields rose in response.
Other, more recent, economic indicators suggested that economic
growth will not be excessive and inflationary pressures will remain
well-contained. This continued benign inflationary environment
supported lower tax-exempt bond yields in recent months. US Treasury
bond yields exhibited similar, albeit greater, volatility during the
period ended October 31, 1996 falling over 20 basis points to end
the period at 6.64%. Over the past six months, tax-exempt bond
yields registered significantly greater declines than shown by the
US Treasury bond market. This relative outperformance by the
municipal bond market was largely the result of the strong technical
support the tax-exempt market enjoyed throughout most of 1996.
Perhaps most significantly, the pace of new bond issuance recently
slowed.
Over the last year, approximately $180 billion in long-term
municipal securities was issued, an increase of over 25% compared to
the same period a year ago. Much of this increase was the result of
issuers seeking to refinance their existing higher-couponed debt as
interest rates declined in 1995 and early 1996. As interest rates
rose, these financings became increasingly economically impractical,
and issuance declined. Over the last six months, approximately $90
billion in long-term tax-exempt securities was underwritten, an
increase of 5% versus the comparable period a year earlier. Only $41
billion in tax-exempt securities was issued in the last three
months, a 3% decline in issuance compared to the October 31, 1995
quarter.
At the same time, investor demand remained consistently strong. With
nominal new-issue yields generally above 6%, retail investor
interest was steady. Additionally, investors received over $50
billion this June and July in assets derived from coupon income,
bond maturities, and proceeds from early redemptions. Annual new
bond issuance declined in recent years and is expected to remain
below levels seen in the early 1990s. Consequently, as the higher-
couponed bonds issued in the early-to-mid 1980s were redeemed at
their first optional call dates, the total number of outstanding tax-
exempt bonds has declined. This combination of a declining net
supply and significant amounts of assets available for investment
helped maintain investor demand in recent months.
It is unlikely that the municipal bond market will continue to
significantly outperform US Treasury securities in the near future.
The tax-exempt bond market's recent performance led to the yield
ratio between long-term taxable and tax-exempt securities falling
from in excess of 90% to approximately 85%. While historically still
very attractive, some institutional investors, particularly short-
term traders, began to view the tax-exempt bond market's recent
outperformance as an opportunity to sell a relatively expensive
asset. However, to the long-term investor, such a sale would
represent the loss of an attractively priced asset which may not be
easily replaced given the relative scarcity of municipal bonds under
present supply conditions.
<PAGE>
Looking forward, no clear consensus for the direction of interest
rates currently exists. Perhaps, the primary focus going forward
will be the extent to which the increase in interest rates seen thus
far in 1996 will negatively impact future economic growth. Should
growth slow in the interest rate-sensitive sectors of the economy,
like housing, auto, and consumer spending, as many economists assert
is likely, then bond yields are likely to decline. Under such a
scenario, the municipal bond market's performance is likely to
closely mirror that of US Treasury bond market.
Portfolio Strategy
For the 12 months ended October 31, 1996, we managed the Fund with
the intention of sustaining an attractive level of tax-exempt income
while trying to achieve an above-average total return. We entered
the 12-month period optimistic that interest rates would decline.
This opinion was based on the belief that higher interest rates
earlier in the year would cause a drag on the economy. To take
advantage of this scenario, we extended the Fund's duration and
lowered our cash reserve position to a minimal level. From October
1995 to January 1996, the impression that the economy had slowed and
that there was no inflation on the horizon was enough to lower
interest rates by almost 50 basis points. Two rounds of Federal
Reserve Board easings in December 1995 and January 1996 made
investors complacent. This set the stage for a sudden loss of
investor confidence as an undeniably strong employment number in
March blindsided the market and began a period of extreme
volatility, which continued through the end of October. Looking
ahead, we expect this volatility to continue, and our portfolio
strategy is expected to remain neutral until the direction of the
economy becomes clearer.
In Conclusion
We appreciate your interest in MuniVest California Insured Fund,
Inc., and we look forward to serving your investment needs in the
months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Roberto Roffo)
Roberto Roffo
Vice President and Portfolio Manager
November 25, 1996
Portfolio
Abbreviations
To simplify the listings of MuniVest California Insured Fund, Inc.'s
portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list below and at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General ObligationBonds
HFA Housing Finance Agency
INFLOS Inverse Floating Rate Municipal Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <C> <C>
California--100.6% AAA Aaa $1,985 Arcadia, California, Unified School District, UT,
Series B, 6.50% due 7/01/2015 (c)(f) $ 2,158
<PAGE>
AAA Aaa 2,485 California Health Facilities Financing Authority,
Insured Revenue Bonds (Children's Hospital of San
Diego), 7% due 7/01/2000 (d)(h) 2,755
AA- Aa 2,465 California HFA, Home Mortgage Revenue Bonds, AMT,
Series F-1, 7% due 8/01/2026 2,618
AA- Aa 2,000 California HFA, Revenue Bonds, RIB, AMT, 8.856%
due 8/01/2023 (e) 2,116
California Pollution Control Financing Authority,
PCR, Refunding (Pacific Gas and Electric Co.), VRDN (a):
A1 NR* 200 AMT, Series G, 3.60% due 2/01/2016 200
A1+ NR* 500 Series C, 3.55% due 11/01/2026 500
California Pollution Control Financing Authority,
Solid Waste Disposal Revenue Bonds, AMT:
A A2 1,440 (Keller Canyon Landfill Company Project), 6.875%
due 11/01/2027 1,535
A1+ VMIG1++ 2,800 (Shell Oil Co.--Martinez Project), VRDN, Series A,
3.60% due 10/01/2024 (a) 2,800
AAA Aaa 1,500 California State, GO, 5.375% due 6/01/2026 (c) 1,441
California State Public Works Board, Lease Revenue
Bonds, Series A:
A A 3,500 (Department of Corrections--Monterey County), 7% due
11/01/2004 (h) 4,095
AAA Aaa 2,500 (Various University of California Projects), 6.40% due
12/01/2016 (b) 2,678
AA Aa 2,000 California Statewide Community Development Authority
Revenue Bonds, COP (Saint Joseph Health System Group),
6.625% due 7/01/2021 2,142
NR* Aa2 1,000 California Statewide Community Development Authority, Solid
Waste Facility Revenue Bonds (Chevron U.S.A. Inc. Project),
VRDN, AMT, 3.60% due 12/15/2024 (a) 1,000
AAA Aaa 2,000 Central Coast Water Authority, California, Revenue Bonds
(Water Project Regional Facilities), 6.60% due 10/01/2022 (b) 2,199
AAA Aaa 1,990 Compton, California, Community Redevelopment Agency, Tax
Allocation Refunding Bonds (Compton Redevelopment Project),
Series A, 6.50% due 8/01/2013 (g) 2,161
AAA Aaa 2,000 Cucamonga County, California, Water District Facilities
Refinancing Bonds, COP, 6.50% due 9/01/2022 (c) 2,164
<PAGE>
AAA Aaa 4,000 Culver City, California, Redevelopment Finance Authority,
Tax Allocation Revenue Refunding Bonds, 5.50% due
11/01/2014 (b) 4,027
Fresno, California, Sewer Revenue Bonds, Series A-1 (b):
AAA Aaa 500 6.25% due 9/01/2014 549
AAA Aaa 1,000 5.25% due 9/01/2019 964
Los Angeles, California, Community Redevelopment Agency,
Tax Allocation Refunding Bonds (Bunker Hill), Series H (g):
AAA Aaa 1,500 6.50% due 12/01/2015 1,628
AAA Aaa 3,500 6.50% due 12/01/2016 3,798
AAA Aaa 3,000 Los Angeles, California, Department of Water and Power,
Electric Plant Revenue Refunding Bonds, Second Issue,
5.25% due 11/15/2026 (c) 2,787
AAA Aaa 3,000 Los Angeles, California, Harbor Department Revenue Bonds,
AMT, Series B, 6.625% due 8/01/2025 (d) 3,214
AAA Aaa 7,335 Los Angeles County, California, COP (Correctional Facilities
Project), 6.50% due 9/01/2000 (d)(h) 8,046
Los Angeles County, California, Public Works Financing
Authority, Lease Revenue Refunding Bonds:
AAA Aaa 3,480 (Multiple Capital Facilities Projects), Series A,
5.125% due 6/01/2017 (b) 3,298
AAA Aaa 1,230 Series B, 5.25% due 9/01/2013 (d) 1,183
M-S-R Public Power Agency, California, Revenue Bonds
(San Juan Project) (d):
AAA Aaa 1,500 Refunding, 6.75% due 7/01/2020 1,751
AAA Aaa 2,000 Series E, 6.75% due 7/01/2011 2,195
AAA Aaa 1,740 Modesto, California, Health Facilities Revenue Bonds
(Memorial Hospital Association), Series A, 6.875% due
6/01/2021 (d) 1,909
AAA Aaa 1,000 Oakland, California, Redevelopment Agency, Refunding
Bonds, INFLOS, 8.169% due 9/01/2019 (d)(e) 1,007
AAA Aaa 2,750 Oceanside, California, COP (Watereuse Association,
California, Financing Project), Series A, 6.50% due
10/01/2017 (b) 2,987
A+ A1 2,000 Pasadena, California, COP, Refunding (Old Pasadena Package
Facility Project), 6.25% due 1/01/2018 2,155
AAA Aaa 5,000 Pioneers Memorial Hospital District, California, Refunding,
GO, UT, 6.50% due 10/01/2024 (b) 5,426
<PAGE>
AAA Aaa 4,000 Port Oakland, California, Port Revenue Bonds, AMT, Series E,
6.50% due 11/01/2016 (d) 4,285
Rancho Cucamonga, California, Redevelopment Agency, Tax
Allocation Bonds (Rancho Redevelopment Project) (d):
AAA Aaa 3,000 6.75% due 9/01/2020 3,221
AAA Aaa 1,750 Refunding, 5% due 9/01/2015 1,613
A+ Aa 1,500 Sacramento, California, City Financing Authority, Lease
Revenue Refunding Bonds, Series B, 5.40% due 11/01/2020 1,457
AAA Aaa 4,000 Sacramento, California, Municipal Utilities District,
Electric Revenue Bonds, Series B, 6.375% due 8/15/2022 (d) 4,255
AAA Aaa 1,000 Sacramento County, California, COP, GO, 6.50% due
6/01/2015 (d) 1,071
AAA Aaa 5,000 San Diego County, California, Water Authority Revenue Bonds,
COP, Series 91B, 6.30% due 4/08/2021 (d) 5,260
San Francisco, California, City and County Airport
Commission, International Airport Revenue Bonds, Second Series:
AAA Aaa 2,000 AMT, Issue 5, 6.50% due 5/01/2019 (c) 2,134
AAA Aaa 2,000 AMT, Issue 6, 6.60% due 5/01/2020 (b) 2,165
AAA Aaa 1,500 Refunding, Issue 2, 6.75% due 5/01/2013 (d) 1,659
San Francisco, California, City and County Redevelopment
Agency, Lease Revenue Bonds (George R. Moscone Convention
Center) (g):
AAA Aaa 2,800 6.75% due 7/01/2015 3,107
AAA Aaa 1,500 6.75% due 7/01/2024 1,669
AAA Aaa 2,450 San Mateo County, California, Joint Powers Financing
Authority, Lease Revenue Refunding Bonds (Capital
Projects Program), 5.125% due 7/01/2018 (d) 2,325
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <C> <C>
California AAA Aaa $ 3,500 Stockton, California, Revenue Bonds (Wastewater Treatment
(concluded) Plant Expansion), COP, Series A, 6.70% due 9/01/2014 (c) $ 3,900
AAA Aaa 1,000 Thousand Oaks, California, Redevelopment Agency, Tax
Allocation, Refunding (Thousand Oaks Boulevard
Redevelopment), 5.375% due 12/01/2025 (d) 968
<PAGE>
AAA Aaa 1,500 Vacaville, California, Public Financing Authority, Tax
Allocation Revenue Refunding Bonds (Vacaville Redevelopment
Projects), 6.35% due 9/01/2022 (d) 1,583
AAA Aaa 1,500 Walnut, California, Public Financing Authority, Tax
Allocation Revenue Refunding Bonds (Walnut Improvement
Project), 6.50% due 9/01/2022 (d) 1,625
Total Investments (Cost--$115,219)--100.6% 121,783
Liabilities in Excess of Other Assets--(0.6%) (734)
--------
Net Assets--100.0% $121,049
========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate
in effect at October 31, 1996.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at October 31, 1996.
(f)Bank Qualified.
(g)FSA Insured.
(h)Prerefunded.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of October 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$115,219,369) (Note 1a) $121,783,382
Cash 91,505
Receivables:
Securities sold $ 2,035,406
Interest 2,027,728 4,063,134
------------
Deferred organization expenses (Note 1e) 8,099
Prepaid expenses and other assets 29,211
------------
Total assets 125,975,331
------------
<PAGE>
Liabilities: Payables:
Securities purchased 4,712,689
Dividends to shareholders (Note 1f) 86,486
Investment adviser (Note 2) 51,010 4,850,185
------------
Accrued expenses and other liabilities 75,686
------------
Total liabilities 4,925,871
------------
Net Assets: Net assets $121,049,460
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 per share (1,600 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) $ 40,000,000
Common Stock, par value $.10 per share (5,961,365 shares issued
outstanding) $ 596,136
Paid-in capital in excess of par 82,965,863
Undistributed investment income--net 452,190
Accumulated realized capital losses on investments--net (Note 5) (9,528,742)
Unrealized appreciation on investments--net 6,564,013
------------
Total--Equivalent to $13.60 net asset value per share of Common
Stock (market price--$12.50) 81,049,460
------------
Total capital $121,049,460
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 1996
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 6,912,009
Income (Note 1d):
<PAGE>
Expenses: Investment advisory fees (Note 2) $ 598,847
Commission fees (Note 4) 103,456
Professional fees 71,773
Accounting services (Note 2) 44,172
Transfer agent fees 42,609
Printing and shareholder reports 42,370
Directors' fees and expenses 22,766
Listing fees 16,420
Custodian fees 11,576
Pricing fees 6,488
Amortization of organization expenses (Note 1e) 5,449
Other 13,706
------------
Total expenses 979,632
------------
Investment income--net 5,932,377
------------
Realized & Realized gain on investments--net 170,436
Unrealized Gain on Change in unrealized appreciation on investments--net 1,058,283
Investments--Net ------------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $ 7,161,096
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 5,932,377 $ 6,119,609
Realized gain (loss) on investments--net 170,436 (3,594,227)
Change in unrealized appreciation/depreciation on
investments--net 1,058,283 13,039,828
------------ ------------
Net increase in net assets resulting from operations 7,161,096 15,565,210
------------ ------------
Dividends to Investment income--net:
Shareholders Common Stock (4,628,827) (4,602,835)
(Note 1f): Preferred Stock (1,303,376) (1,492,944)
------------ ------------
Net decrease in net assets resulting from dividends
to shareholders (5,932,203) (6,095,779)
------------ ------------
<PAGE>
Net Assets: Total increase in net assets 1,228,893 9,469,431
Beginning of year 119,820,567 110,351,136
------------ ------------
End of year* $121,049,460 $119,820,567
============ ============
<FN>
*Undistributed investment income--net $ 452,190 $ 452,016
============ ============
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
For the
Period
The following per share data and ratios have been derived April 30,
from information provided in the financial statements. For the Year 1993++ to
Ended October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.39 $ 11.80 $ 15.01 $ 14.18
Operating -------- -------- -------- --------
Performance: Investment income--net 1.00 1.03 1.01 .48
Realized and unrealized gain (loss) on
investments--net .21 1.58 (3.13) .91
-------- -------- -------- --------
Total from investment operations 1.21 2.61 (2.12) 1.39
-------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.78) (.77) (.82) (.34)
Realized gain on investments--net -- -- (.07) --
-------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.78) (.77) (.89) (.34)
-------- -------- -------- --------
Capital charge resulting from issuance of
Common Stock -- -- -- (.03)
-------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.22) (.25) (.20) (.06)
Realized gain on investments--net -- -- (.01) --
Capital charge resulting from issuance of
Preferred Stock -- -- .01 (.13)
-------- -------- -------- --------
Total effect of Preferred Stock activity (.22) (.25) (.20) (.19)
-------- -------- -------- --------
Net asset value, end of period $ 13.60 $ 13.39 $ 11.80 $ 15.01
======== ======== ======== ========
Market price per share, end of period $ 12.50 $ 11.875 $ 10.50 $ 14.75
======== ======== ======== ========
<PAGE>
Total Investment Based on market price per share 11.95% 20.89% (23.56%) .64%+++
Return:** ======== ======== ======== ========
Based on net asset value per share 8.02% 21.30% (15.58%) 8.34%+++
======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .82% .81% .76% .41%*
Net Assets:*** ======== ======== ======== ========
Expenses .82% .81% .81% .83%*
======== ======== ======== ========
Investment income--net 4.94% 5.33% 5.06% 4.82%*
======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) $ 81,049 $ 79,821 $ 70,351 $ 89,497
======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $ 40,000 $ 40,000 $ 40,000 $ 40,000
======== ======== ======== ========
Portfolio turnover 84.92% 90.41% 81.53% 38.34%
======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,026 $ 2,996 $ 2,759 $ 3,237
======== ======== ======== ========
Dividends Per Investment income--net $ 815 $ 933 $ 760 $ 239
Share On ======== ======== ======== ========
Preferred Stock
Outstanding:++++++
<FN>
*Annualized.
**Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales loads.
***Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Commencement of Operations.
++++The Fund's Preferred Stock was issued on June 1, 1993.
++++++Dividends per share have been adjusted to reflect a two-for-
one stock split that occurred on December 1, 1994.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniVest California Insured Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified,
closed-end management investment company. The Fund determines and
makes available for publication the net asset value of its Common
Stock on a weekly basis. The Fund's Common Stock is listed on the
New York Stock Exchange under the symbol MVC. The following is a
summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily
in the over-the-counter markets and are valued at the most recent
bid price or yield equivalent as obtained by the Fund's pricing
service from dealers that make markets in such securities. Financial
futures contracts and options thereon, which are traded on
exchanges, are valued at their closing prices as of the close of
such exchanges. Options, which are traded on exchanges, are valued
at their last sale price as of the close of such exchanges or,
lacking any sales, at the last available bid price. Securities with
remaining maturities of sixty days or less are valued at amortized
cost, which approximates market value. Securities and assets for
which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the
Board of Directors of the Fund, including valuations furnished by a
pricing service retained by the Fund, which may utilize a matrix
system for valuations. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the
general supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures con-
tracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization expenses--Deferred organization expenses
are amortized on a straight-line basis over a five-year period
beginning with the commencement of operations of the Fund.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
<PAGE>
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 1996 were $96,118,070 and
$100,255,130, respectively.
Net realized and unrealized gains (losses) as of October 31, 1996
were as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $ 60,590 $ 6,564,013
Short-term investments (384) --
Financial futures contracts 110,230 --
------------ ------------
Total $ 170,436 $ 6,564,013
============ ============
As of October 31, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $6,564,013, of which $6,600,418
related to appreciated securities and $36,405 related to depreciated
securities. The aggregate cost of investments at October 31, 1996
for Federal income tax purposes was $115,219,369.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock,
including Preferred Stock, par value $.10 per share, all of which
were initially classified as Common Stock. The Board of Directors is
authorized, however, to reclassify any unissued shares of capital
stock without approval of holders of Common Stock.
Common Stock
For the year ended October 31, 1996, shares issued and outstanding
remained constant at 5,961,365. At October 31, 1996, total paid-in
capital amounted to $83,561,999.
<PAGE>
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund that entitle their holders to receive cash
dividends at an annual rate that may vary for the successive
dividend periods. The yield in effect at October 31, 1996 was 2.85%.
As of October 31, 1996 there were 1,600 AMPS authorized, issued and
outstanding with a liquidation preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the year ended
October 31, 1996, MLPF&S, an affiliate of FAM, earned $77,885 as
commissions.
5. Capital Loss Carryforward:
At October 31, 1996, the Fund had a net capital loss carryforward of
approximately $7,718,000, of which $5,501,000 expires in 2002 and
$2,217,000 expires in 2003. This amount will be available to offset
like amounts of any future taxable gains.
6. Reorganization Plan:
On May 3, 1996, the Board of Directors approved a plan of
reorganization, subject to shareholder approval and certain other
conditions, whereby MuniYield California Insured Fund II, Inc. would
acquire substantially all of the assets and liabilities of the Fund
in exchange for newly issued shares of MuniYield California Insured
Fund II, Inc. MuniYield California Insured Fund II, Inc. is a
registered, non-diversified, closed-end management investment
company with a similar investment objective to the Fund and is
managed by FAM.
7. Subsequent Event:
On November 8, 1996, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.068445 per share, payable on November 27, 1996 to shareholders
of record as of November 18, 1996.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
MuniVest California Insured Fund, Inc.:
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniVest
California Insured Fund, Inc., as of October 31, 1996, the related
statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and
the financial highlights for each of the years in the three-year
period then ended and the period April 30, 1993 (commencement of
operations) to October 31, 1993. These financial statements and the
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
<PAGE>
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at October
31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniVest California Insured Fund, Inc. as of October 31, 1996, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 3, 1996
</AUDIT-REPORT>
